DR 97-238
                 Connecticut Valley Electric Company Inc.
               1998 Conservation and Load Management Filing
                          Order Approving Filing
                         O R D E R   N O.  22,892
                               April 1, 1998
         APPEARANCES: Kenneth C. Picton, Esq. for Connecticut
     Valley Electric Company Inc. and Michelle A. Caraway for the
     Staff of the New Hampshire Public Utilities Commission.
               On November 14, 1997, Connecticut Valley Electric
     Company Inc. (CVEC) filed with the New Hampshire Public Utilities
     Commission (Commission) a petition for approval of its 1998
     Conservation and Load Management (C&LM) Proposal for C&LM
     Percentage Adjustment (C&LMPA) Effective January 1, 1998.  The
     C&LMPA includes recovery of C&LM costs related to regulatory
     reporting, net lost revenues, incentive share and applicable
               By Order No. 22,810 (December 24, 1997), the Commission
     scheduled a prehearing conference for January 13, 1998, set
     deadlines for intervention requests and objections thereto,
     outlined a proposed procedural schedule, and required the Parties
     and Commission Staff (Staff) to summarize their positions with
     regard to the filing for the record.  There were no Motions to
     Intervene filed.  The Office of the Consumer Advocate is a
     statutorily recognized intervenor.  On January 27, 1998, the
     Commission issued Order No. 22,842 approving the procedural
               Pursuant to the approved procedural schedule, CVEC and
     Staff engaged in formal discovery and technical sessions.  On
     March 3, 1998, Staff filed a letter with the Commission stating
     that Staff did not file testimony in this proceeding and that
     Staff and CVEC agreed that it was not necessary to proceed with
     the Settlement Conference scheduled for March 9, 1998.  Instead,
     Staff and CVEC believed that the Commission would be served best
     by presenting the filing at the March 24, 1998.  A hearing was
     held on March 24, 1998 before the Commission at which CVEC
     presented two witnesses supporting the filing.
               By Commission Order No. 22,536 (March 31, 1997) issued
     in DR 96-362, CVEC's 1997 C&LM Program docket, the Commission
     approved a Stipulation entered into between CVEC and Staff. 
     Based primarily on the Commission's Restructuring New Hampshire's
     Electric Utility Industry: Final Plan (Final Plan), CVEC and
     Staff stipulated that CVEC would be allowed to use the 1997
     program year to ramp down all existing C&LM programs that it
     offered while completing installations of those measures to which
     it had already made commitments.  The goal of ramping down the
     programs was to end program expenditures and funding as of
     January 1, 1998, or as soon thereafter as practicable.  The 1997
     C&LMPAs were established at a level to collect an estimated
     $250,000 of C&LM direct costs, net lost revenues and financial
               At the March 24, 1998 hearing, the Company presented
     two witnesses, K. Dean Pierce, Manager of Market Planning, and
     Carl Scott, Consultant, Revenue Requirements, to describe and
     support CVEC's 1998 C&LMPA filing.  For 1998, carry-over direct
     program costs, costs for regulatory reporting, and recovery of
     net lost revenues and financial incentives represent
     approximately $127,000 of the amounts to be collected through the
               Per the Stipulation approved by Order No. 22,536, CVEC
     used 1997 to ramp down its C&LM programs.  CVEC is not proposing
     any programs for 1998.  Direct program costs incurred in January
     through March 1998 represent the remaining costs of serving
     participants CVEC had made commitments to in 1997.  For 1998,
     CVEC proposes only $5,000 of direct costs related to monthly
     regulatory reporting and the filing of the 1999 C&LMPA by
     November 1, 1998.
                    Witness Pierce described a proposal to eliminate the
     C&LMPAs in the future.  As described in his written testimony,
     CVEC presently projects net lost revenues to be collected through
     the year 2024.  Given that all measure installations are known,
     CVEC could project the stream of net lost revenues based on all
     measures installed through 1997.  If that stream of revenues was
     discounted, that present value could be recovered in a single
     year and the C&LMPAs could be reduced or eliminated if no further
     C&LM costs were incurred.  Ex. 1 at p. 10.  
               CVEC Witness Scott stated that CVEC's response to a
     data request estimated the net present value of net lost revenues
     for the period 1999 through 2024 to be approximately $510,000. 
     Witness Scott also stated that CVEC was not requesting that this
     proposal be approved in this docket and that CVEC and Staff did
     not fully explore the implications of implementing this proposal
     for 1998. 
               On March 20, 1998, the Commission issued its rehearing
     order, Order No. 22,875 in Docket DR 96-150, Electric Utility
     Restructuring.  CVEC witnesses were not prepared to answer how
     Order No. 22,875, as it pertains to energy efficiency programs,
     applies to CVEC except to state that CVEC currently has no plans
     to reinstate its C&LM programs in 1998.
                    Commissioner Geiger asked the witnesses if CVEC is
     currently tracking customer requests for its C&LM programs. 
     Witness Pierce stated that such inquiries are not being tracked
     by CVEC but that they could be tracked as long as the capability
     existed with CVEC's parent company, Central Vermont Public
               The revised C&LMPA calculation, Tariff 10th Revised
     Page 20, was presented at the hearing.  Ex. 4.  The C&LMPAs were
     calculated using actual data known through February 1998.
     Additionally, the total estimated revenues for April through
     December 1998, which is the denominator used to calculate the
     C&LMPAs, are based on the frozen Fuel Adjustment Clause (FAC) and
     the Purchased Power Cost Adjustment (PPCA) rates for 1998 as
     ordered by the Commission in Order No. 22,815 (December 31, 1997)
     in Docket DR 97-241. 
               CVEC proposes a Residential C&LMPA of 0.34% and a
     Commercial and Industrial (C&I) C&LMPA credit of (0.78%).  These
     compare to C&LMPAs of 0.82% and 2.51% for the Residential and C&I
     classes respectively.  The Residential C&LMPA of 0.34% equates to
     a weighted annual average decrease of 32 cents ($0.32) on a
     monthly 500 kilowatt-hour bill.  Ex. 4, Revised Attachment CJF-5.
               CVEC and Staff also request that the Commission waive
     the application of N.H. Admin. Rules, Puc 1203.05(a) so that the
     1998 C&LMPAs may be effective on a bills rendered basis.
               After careful review of the November 14, 1997 filing,
     supporting testimony at the March 24, 1998 hearing and the
     exhibits, we find that CVEC's proposed C&LMPAs, as revised at the
     hearing, are reasonable and in the public good.
               Consistent with Order No. 22,536, CVEC used 1997 to
     ramp down its C&LM programs to effectively terminate them on
     January 1, 1998.  The termination of CVEC's C&LM programs is not
     inconsistent with the Commission's stated policy objectives
     regarding energy efficiency programs in either the Final Plan or
     Order No. 22,875 issued March 20, 1998.
               The rehearing order stated our belief that "it is
     appropriate to move as quickly as possible from the payment of
     lost revenues as part of any DSM program."  We are searching for
     ways to eliminate lost revenues and direct CVEC and Staff to
     consider the proposal detailed above along with other possible
     alternatives which may achieve our goal.  CVEC and Staff can use
     the working group that is to be established as part of Order No.
     22,875 as a forum to discuss different methods with other
     parties.  CVEC and Staff should carefully consider of the rate
     impact of all alternatives considered.  A discussion of the
     methods considered and the impacts of each should be incorporated
     in CVEC's 1999 C&LMPA filing.
               Additionally, we direct CVEC to track the inquiries it
     receives for its C&LM programs.  Minimally, CVEC must maintain a
     log of the number of inquiries it receives, the nature of the
     inquiries and the specific programs that the customers are asking
     about.  This information shall assist us in determining the
     extent to which customers are expecting energy efficiency
     programs to be offered by their local distribution companies.
               CVEC Witness Scott described that the revenues used in
     the calculation of the C&LMPAs were based on the frozen FAC and
     PPCA rates.  Should the Commission authorize any dramatic change
     to the FAC and/or PPCA rates during the April through December
     1998 period which would have a material effect on the projected
     over/undercollection at December 31, 1998, CVEC shall consider
     filing for an interim C&LMPA.
               Finally, consistent with treatment we have recently
     allowed for Granite State Electric Company in Docket DR 97-211 in
     Order No. 22,818 (January 2, 1998), we waive the application of
     N.H. Admin. Rules, Puc 1203.05(a), which requires generally that
     rate changes be implemented on a service rendered basis, and will
     allow CVEC to implement its C&LMPAs on a bills rendered basis. 
     This waiver, pursuant to Puc 201.05, produces a result consistent
     with the principles embodied in Puc 1203.05(b), which sets forth
     exceptions for allowing rate changes on a bills rendered basis,
     and is in the public interest because it eliminates consumer
     confusion and reduces administrative costs.
               Based upon the foregoing, it is hereby 
               ORDERED, that the proposed C&LMPAs, as revised at the
     March 24, 1998 hearing, are hereby APPROVED on a bills rendered
     basis; and it is
               FURTHER ORDERED, that CVEC shall track, to the best of
     its abilities, the number of inquiries it receives for C&LM
     programs, the nature of the inquiries, and the specific programs
     that the customers are asking about.  A summary of this
     information shall be included in CVEC's 1999 C&LMPA filing; and
     it is
               FURTHER ORDERED, that CVEC shall submit its 1999 C&LMPA
     filing by November 1, 1998; and it is
               FURTHER ORDERED, that CVEC shall file compliance tariff
     pages within ten days of the date of this order.
                    By order of the Public Utilities Commission of New
     Hampshire this first day of April, 1998.
        Douglas L. Patch    Bruce B. Ellsworth        Susan S. Geiger
            Chairman           Commissioner            Commissioner
     Attested by:
     Thomas B. Getz
     Executive Director and Secretary